Rothbard on Big Business

6 August 2008 at 9:09 am 10 comments

| Peter Klein |

We at O&M are sometimes described as “pro-business.” But this is not correct. We strongly support the economic function of commerce, and we think private ownership of capital, the profit-seeking activities of entrepreneurs and managers, and unfettered markets for consumer goods, factors of production, and financial assets are essential to a strong economy. But that doesn’t mean we admire the behavior and character of every capitalist, entrepreneur, and manager. Indeed, plenty are scoundrels. Empirically, the businesspeople who rise to the top in today’s mixed economy, with its peculiar blend of free markets and state controls, are likely to be those who excel in political entrepreneurship, in “working the system” to their advantage.

Murray Rothbard summarizes this view in a private letter written in 1966:

For some time I have come to the conclusion that the grave deficiency in the current output and thinking of our libertarians and “classical liberals” is an enormous blind spot when it comes to big business. There is a tendency to worship Big Business per se. . . and a corollary tendency to fail to realize that while big business would indeed merit praise if they won that bigness on the purely free market, that in the contemporary world of total neo-mercantilism and what is essentially a neo-fascist “corporate state,” bigness is a priori highly suspect, because Big Business most likely got that way through an intricate and decisive network of subsidies, privileges, and direct and indirect grants of monopoly protection.

Rothbard refers his correspondent to Gabriel Kolko, William Appleman Williams, James Weinstein, C. Wright Mills, and other New Left critics of the corporate state for details. For more on Rothbard’s own views see “Left and Right: The Prospects for Liberty” (1965) and “Confessions of a Right-Wing Liberal” (1968), as well as related essays by Joseph Stromberg and Roy Childs.

Entry filed under: - Klein -, Business/Economic History, Classical Liberalism, Institutions.

Thanks to Randy, and Get Well Soon! Homogeneity and Cooperation

10 Comments Add your own

  • 1. Kevin Carson  |  6 August 2008 at 2:33 pm

    Thanks for posting that quote. Is it from some collection of his correspondence?

    Coincidentally, I saw an academic anthology of readings on capitalism on the bargain table at the used bookstore yesterday, and it included “The Great Society: A Libertarian Critique.”
    Money quote:

    Another conservative blind spot is their failure to identify which groups have been responsible for the burgeoning of statism in the United States. In the conservative demonology, the responsibility belongs only to liberal intellectuals, aided and abetted by trade unions and farmers. Big businessmen, on the other hand, are curiously exempt from blame (farmers are small enough businessmen, apparently, to be fair game for censure.) How, then, do conservatives deal with the glaringly evident onrush of big businessmen to embrace Lyndon Johnson and the Great Society? Either by mass stupidity (failure to read the works of free-market economists), subversion by liberal intellectuals (e.g., the education of the Rockefeller brothers at Lincoln School), or craven cowardice (the failure to stand foursquare for free-market principles in the face of governmental power). 6 Almost never is interest pinpointed as an overriding reason for statism among businessmen. This failure is all the more curious in the light of the fact that the laissez-faire liberals of the eighteenth and nineteenth centuries (e.g., the Philosophical Radicals in England, the Jacksonians in the United States) were never bashful about identifying and attacking the web of special privileges granted to businessmen in the mercantilism of their day.

  • 2. Peter Klein  |  6 August 2008 at 2:39 pm

    Kevin, it’s in an unpublished letter. I understand that some edited volumes of correspondence are in the works but don’t know details. Your quote is even more to the point.

  • 3. Brian Pitt  |  6 August 2008 at 4:01 pm

    Professor Klein,

    I couldn’t agree more! I am in NY attending a FEE seminar on Austo-econ. listening to a number of “libertarians and classical liberals” inveighing against the incentive structure of the social welfare state, although glossing over the perverse incentive structure of corporate welfare.

    Btw, I listened to an excellent lecture by Lewin on the application of Austro-econ to management studies, wherein he adduced your work, Foss, and Langlois. Why no paper presented by you?

  • 4. Peter Klein  |  6 August 2008 at 4:05 pm

    Brian, thanks, I suggest you lodge a formal complaint with FEE’s upper management. That Lewin guy is OK, but come on — how can you understand him though that funny South African accent?

  • 5. Michael F. Martin  |  6 August 2008 at 9:10 pm

    Big business gets big by being more inclusive. It’s easy for an anarcho-libertarian to throw stones; it’s much harder (indeed, it’s impossible) for them to do any better without running into the same problems. Classical liberals have the upper hand on anarcho-libertarians here because the distaste for “Big Business” is simply not pragmatic.

  • 6. Michael F. Martin  |  6 August 2008 at 9:58 pm

    I should add that anarcho-capitalism becomes less and less pragmatic as populations grow within our fixed world of resources. You can say that technology will save it; but technology too is fostered by increased collaboration. If everybody just left everybody else alone we’d all still be living in huts. Actually, most of us wouldn’t be around at all.

  • 7. That Loony Lefty Rothbard | Austro-Athenian Empire  |  2 August 2009 at 2:25 pm

    […] a 1966 letter which has not yet been published (Peter Klein quotes from it here), Rothbard writes: For some time I have come to the conclusion that the grave deficiency in the […]

  • […] [4] Quoted in Peter Klein, "Rothbard on Big Business." […]

  • 10. Economic Inequality: Three Takes | Policy of Truth  |  15 June 2019 at 2:58 pm

    […] Here Branden, and by presumption Rand, are endorsing a crucial part of the left-libertarian idea of competition as a levelling force. The quotation makes an interesting pairing with a remark of Murray Rothbard’s in a 1966 letter: […]

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